If you’re thinking about starting a small business, you may be wondering how much money you can make. The answer to that question depends on the type of business you start, your experience and how much time you spend working on it.

What do you think of when you hear the word “small business”? A mom-and-pop shop? A local farm? An artisanal bakery? Well, it’s time to take a look at the facts. The fact is, small businesses are everywhere. That means there’s a lot of money floating around that could be yours if you take advantage of it.

Do Small Business Owners Make a Lot of Money

The short answer is yes. But, the long answer is more complicated.

First, let’s get one thing out of the way: you can make a lot of money starting a small business. But it’s not necessarily easy, and it’s definitely not automatic. You have to work hard, and you have to be willing to take risks on yourself.

You might be surprised to learn that there are many small business owners who make a lot of money. In fact, there are many small businesses that have managed to grow into multimillion-dollar companies with thousands of employees.

When you think about it, this should not be surprising. After all, how do you think these companies were able to grow so fast? It’s because the founders were able to develop a strong work ethic, which led them to put in long hours and devote themselves fully to their business. This is what enabled them to build up their businesses from scratch into something that would eventually become successful.

Small business owners do make a lot of money, but they also work harder than anyone else. They have to work long hours and often miss out on things that other people take for granted.

Of course, if you’re looking to start your own business, being an entrepreneur can be very rewarding and lucrative. You’ll get to control your own schedule and make decisions about how you spend your time. On top of that, you can set your own pay rate and decide how much time you want to put into your business at any given moment.

But there are some downsides too: You may not have health insurance or paid vacation days from work (unless you offer them yourself), so if something goes wrong with your health or family situation, it could lead directly into financial trouble for you!

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How much does a small business owner make a year?

Industry, geography, and experience are just a few examples of the variables that affect salaries. Being an owner of a small business is similar. Since there is no set wage for small business owners, it is impossible to predict your personal income.

You might be curious about the typical income of business owners. The average small business owner makes $60,648 a year, according to PayScale. However, year total earnings can range from $29,000 to $127,000.

Since the cost of living varies by state (and even by city), looking at a national average might be deceptive. Your revenue as a small business owner is not always clear-cut.

Variables affecting your revenue


The industry that your small business is in may have an impact on your income. Some industries and jobs pay more than others. Examine the earnings of other entrepreneurs in your niche to get an idea of how much small business owners make. You shouldn’t compare your income to that of business owners in other sectors.

For instance, while floral designers typically make $32,100 a year, computer and mathematical occupations earn $99,860 annually.


Again, the location of your firm might affect your income. The cost of living varies considerably from place to place. Additionally, some regions have a higher demand than others for particular goods and services.

The BLS compiles a State Occupational Employment and Wage Estimates manual that divides wage data by state, industry, and occupation. This website can be used to compare salaries for various jobs. You might earn more in some places than others because city size and costs are correlated.


Depending on whether you receive an owner’s draw or a salary from your business, your income may fluctuate. A salary is a set sum you routinely pay yourself, but a draw is a percentage of the revenues from your company.

Your income is based on your profits unless you get a pay. You might receive a less paycheck than you would do when corporate revenues are great. Your business may not even turn a profit when you are first starting out until at least the first year. In this situation, you might choose to take home only the amount of money required to pay your bills.

Instead of writing yourself a hefty check, think about how it will impact the health of your company. Instead of keeping the money as revenue, you can decide to reinvest it in your company.

The SBA reports that the majority of small business owners cap their compensation at 50% of their revenue. In other words, if your company makes $100,000, your income shouldn’t be more than $50,000. For some business owners, their personal income increases along with their company’s profits.

Financial Tips for Small Business Owners

Examine industry standards

Although no two firms are exactly alike, there are some. Do your research, browse the internet for information about the sector, talk to local business people, visit your local library, and check the Internal Revenue Service (IRS) website to obtain a sense of what proportion of the incoming revenue will probably be devoted to cost groups.

Because they are more vulnerable to industry downturns than their larger, more diversified competitors, small firms can be exceedingly volatile. You don’t need to check for specifics in this case; just an average.

Make a spreadsheet

Create a spreadsheet to project the total amount and proportion of your revenue that will need to go toward raw materials and other costs before purchasing or launching a business. Before moving further, it’s a good idea to get in touch with any vendors you might need to deal with. Repeat the process for rent, taxes, insurance, etc. It’s crucial that you comprehend the various budgets you’ll need to establish for your small corporation and how to carry them out.

Factor in some slack

You may predict that the company will grow its revenue at a certain rate in the future or that some expenses will be fixed or able to be controlled, but keep in mind that these predictions are only predictions. As a result, before growing the company or hiring new staff, it’s a good idea to account for some wiggle room and make sure that you have more money coming in than you need.

Cut costs

If money is limited and you need to find a way to pay a bill that is essential, advertise, or take advantage of another opportunity, think about cost-cutting. Pay close attention to things that can be significantly controlled. Another suggestion is to defer purchases until the beginning of a new billing cycle or to make the most of any payment terms provided by suppliers and creditors. The business owner may be able to get some much-needed breathing room and expanding space by making some careful maneuvers in this area.

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Periodically evaluate the business

Small business owners should create budgets more frequently even though many companies only do it once a year. Given how unpredictable business may be and how unanticipated costs might affect revenue projections, many small business owners actually find themselves preparing just a month or two in advance. A useful technique for business owners to make sure they have adequate funding to suit their needs is to set up a budget planning calendar.

Involve your employees

Not all of the pressure falls on you just because you’re the company’s owner. Each employee should be aware of the budget’s guiding principles and contribute any knowledge or suggestions they consider essential. Your budget affects everyone in your firm.

Nate Masterson, marketing manager at Maple Holistics, stated that a good budget is far too critical and that there are too many variables for this burden to fall on one person. To handle a small business budget properly, a team of employees with a variety of talents should closely examine an ideal budget. By depending on a well-organized team, you may approach your budget from many angles so that you can eventually prepare for the unexpected.

Employees should also be informed of any changes you make that could have an impact on them or your business so they know what is expected of them moving ahead.

Avoid underpaying yourself

Many business owners, especially in the beginning, are tempted to preserve every dollar they make for their budget. While having a reserve of funds is crucial, your budget should also provide enough money for paying you.

Small business owners often forget that they need to be paid since there are so many moving components, according to Doug Keller, a financial counselor at Peak Personal Finance. When paying oneself, some people feel bad since it appears like the money could be spent somewhere else. However, the proprietor is still just a worker at the end of the day. You must make allowances for this and find alternative ways to cover other costs.

Identify and comprehend your risks

Every business effort involves risk, and each risk has the potential to have an influence on your company’s finances. In order to effectively plan for their financial future, small business owners must take into account both their long- and short-term risks, according to Paul Cho, CEO of Align Income Share Funding.

How will adjustments to the minimum wage or health care mandates affect your workforce? said Cho. “Do you conduct business in an area where natural disasters are likely to occur? Do you hire a lot of seasonal employees? All small enterprises should be aware of the various hazards they may face both now and in the future. An improved understanding of emergency preparation, insurance requirements, etc. can be developed once the dangers to productivity have been identified.

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Overestimate expenses

If you run your firm on a project-by-project basis, you are aware that each customer is unique and that no two projects will ever be exactly alike. Often, it’s difficult to anticipate when something will exceed its budget.

Planning and responding to the unexpected are big parts of business, according to Keller. “For owners of small businesses, failure to foresee an expense or its magnitude could be fatal and cripple the business before it has had a chance to develop. It’s crucial for business owners to overestimate costs in order to protect themselves from that. Owners will be able to protect themselves against failure or risk by doing this as a survival strategy.


In conclusion, small business owners do make a lot of money. They are able to earn extra income by running their own companies and making decisions on a daily basis. They also have the opportunity to grow their businesses into something big and successful! The only thing holding them back from reaching their full potential is their own mindset. If you believe in yourself, you can achieve anything!

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